Alexandria on the Daily Show: the Moral Economy and Modern Money

That the US Treasury is authorized to sell Treasury bonds in the amount of the “deficit”, the amount spent over the amount taxed, does not mean government spending is financed by the bond sales, though those bond sales might have a desirable inflation-dampening effect on the demand created by some government spending over tax receipts, as bond sales defer spending on goods and services. Inflation is also a concern of MMT economists but is not assumed to be the automatic result of net injections of more cash into the economy but rather on levels of actual demand for particular goods and services. The US federal government, as are governments like those of the UK, China, Norway, Sweden, India, Russia, or Japan, is in this “monetarily sovereign” in that it doesn’t get its currency from anywhere else other than its own fiscal operations.
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Searching for sources of money to tax puts her, Sanders, and other “find-the-tax-dollars-first” progressives on a collision course with various interest groups that want to hold onto their money and gives those groups ultimate “veto-power” over spending, if they can lobby hard enough against raising taxes as a precondition for social or ecological spending. Taxation in general and higher levels of taxation are required to realize ambitious social visions and contain inflation but the “pay for” spending-to-match-taxation paradigm will put immediate brakes on those visions at the critical initial stages of developing the social and physical infrastructure we need for the 21st Century.

Ocasio-Cortez may be following the lead of Bernie Sanders in accepting the deficit hawk, “pay for” paradigm. Though I have campaigned for and support most of what Bernie Sanders has done, he has continued to follow the “pay for” framework in his public utterances, despite an ongoing association with Stephanie Kelton, a leading MMT economist and the founding editor of New Economic Perspectives. I am fearful that Ocasio-Cortez will follow Sanders’ path in contributing to deficit worry and “tax as revenue source”. Sanders, despite inhabiting the leftmost portion of the American public sphere before Ocasio-Cortez, is, in my view, too cautious in presenting a transformative vision for American society and physical infrastructure.

Watching an interview with Alexandria Ocasio-Cortez is always fun, but that isn’t necessarily the most important part of the article. So I urge you to read the article after watching the interview.

Toward the end of the article the author gets into the real meaty stuff.

I proposed in 2013 that macroeconomists and in particular MMT economists should develop a macroeconomic accounting methodology for use by political parties and governments as a replacement for business accounting methods. Rather than just critique existing CBO or “government as household” methodology, economists, ethicists, political scientists, sociologists and natural scientists should collaborate in creating a way for governments to effectively convert commonly held ethical principles and known factual data about the real world into government fiscal policy that will effectively and beneficially transform our material reality, reform government and related social institutions. Macroeconomic accounting would provide a step-by-step methodology for political leaders and their support staff and consulting scientists and experts to follow through on realizing the public good via better government fiscal policy.